Indeed, according to an analysis published in April by the International Monetary Fund, Serbia’s economy will suffer less than most from the lockdowns imposed across Europe and much of the world to limit the spread of the novel coronavirus.
Serbia’s gross domestic product, GDP, is forecast to contract this year by three per cent, compared to seven per cent in Germany, 7.2 per cent in France and 9.1 per cent in Italy, the original epicentre of the outbreak in Europe following its spread from China.
The European Commission – the executive arm of the European Union – sees Serbia’s output contracting four per cent, considerably less than the 7.5 per cent it predicts for the EU as a bloc.
But does this really mean Serbia is “the best in Europe” and among the best in the world, as the country’s ruling Progressive Party would have Serbs believe as they head to the polls in a parliamentary election next month?
A BIRN fact-check suggests not.
The fact the pandemic and the subsequent lockdowns have had less of an impact on the Serbian economy speaks more to the stage of Serbian economic development, the share of output generated by agriculture as opposed to services and tourism and its relatively low level of integration with the global economy, experts argue.
If the IMF estimates are the benchmark, then Vietnam, Turkmenistan, Uzbekistan, Ivory Coast, Uganda, Ghana and a host of other developing countries can claim to be among the world’s best performers too.
“If you are on the first floor and you climb to the second you have achieved growth of 100 per cent,” said Vladimir Vuckovic of the Fiscal Council, an independent body which advises the government on economic policy. “And if you are on the 100th floor and you also climb just one floor up, it is growth of one per cent.”
“It’s good we have less disruption than some other countries, but it does not mean Serbia is becoming an economic leader in Europe,” Vuckovic told BIRN.
“The circumstances in which rich and poor countries are functioning are completely different. It is natural that developed countries are hit harder by the crisis because their economies are more involved in the international economy and their services sector is a big part of GDP.”
Serbia reliant on agriculture, not pandemic-hit tourism
Take 2019: Serbia recorded growth of 4.2 per cent, while Germany’s economy expanded only 0.6 per cent, its worst result in six years.
Calculated in money terms, however, Serbia’s economy grew by a meagre $889 million compared to $104.7 billion for Germany.
And living standards in the two countries can hardly be compared.
Ljubodrag Savic, an economics professor at the University of Belgrade said there was a similar situation when the global economic crisis hit in 2008. Serbia managed to notch up better growth numbers than most advanced countries, but still it did not catch up.
“Only last year did we get back to the absolute worth of GDP from 2008,” Savic told BIRN. “For the development of countries like Serbia, stable growth is all that matters, not one step back and two steps forward.”
Serbia, he said, can be thankful that the agriculture sector accounts for a sizeable chunk of the country’s overall economic output – more than six per cent – unlike Croatia, for example, where the IMF forecasts a contraction of nine per cent this year in large part because of the hit to the tourism sector that accounts for almost 20 per cent of GDP.
“Our GDP often depends on weather conditions, such as rain or drought, because of the agriculture influence on growth,” Savic said. “We don’t have much tourism except in Belgrade. We should also not be so optimistic because production is run mostly by foreign investors and they can leave Serbia whenever they want.”
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May 18, 2020 at 01:23PM
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BIRN Fact Check: Can Serbia Really be so Proud of its Economic Growth? - Balkan Insight
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